EXHIBIT 10.10
Amended effective September 10, 1993
ABBOTT LABORATORIES NON-EMPLOYEE DIRECTORS' FEE PLAN
SECTION 1
PURPOSE
ABBOTT LABORATORIES NON-EMPLOYEE DIRECTORS' FEE PLAN - referred to below
as the "Plan" - has been established by ABBOTT LABORATORIES - referred to
below as the "Company" - to attract and retain as members of its Board of
Directors persons who are not full-time employees of the Company or any of its
subsidiaries but whose business experience and judgment are a valuable asset
to the Company and its subsidiaries.
SECTION 2
DIRECTORS COVERED
As used in the Plan, the term "Director" means any person who is elected
to the Board of Directors of the Company in April, 1962 or at any time
thereafter, and is not a full-time employee of the Company or any of its
subsidiaries.
SECTION 3
FEES PAYABLE TO DIRECTORS
3.1 Each Director shall be entitled to a deferred monthly fee of
Four Thousand One Hundred Sixty-Seven Dollars ($4,167.00) for each calendar
month or portion thereof (excluding the month in which he is first elected a
Director) that he holds such office with the Company.
3.2 A Director who serves as Chairman of the Executive Committee of
the Board of Directors shall be entitled to a deferred monthly fee of One
Thousand Six Hundred Dollars ($1,600.00) for each calendar month or portion
thereof (excluding the month in which he is first elected to such position)
that he holds such position.
3.3 A Director who serves as Chairman of the Audit Committee of the
Board of Directors shall be entitled to a deferred monthly fee of Six Hundred
Sixty-Seven Dollars ($667.00) for each calendar month or portion thereof
(excluding the month in which he is first elected to such position) that he
holds such position.
3.4 A Director who serves as Chairman of the Compensation Committee
of the Board of Directors shall be entitled to a deferred monthly fee of Six
Hundred Sixty-Seven Dollars ($667.00) for each calendar month or portion thereof
(excluding the month in which he is first elected to such position) that he
holds such position.
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3.5 A Director who serves as Chairman of the Nominations Committee of
the Board of Directors shall be entitled to a deferred monthly fee of Six
Hundred Sixty-Seven Dollars ($667.00) for each calendar month or portion
thereof (excluding the month in which he is first elected to such position)
that he holds such position.
3.6 A Director who serves as Chairman of any other Committee created
by this Board of Directors shall be entitled to a deferred monthly fee of Six
Hundred Sixty-Seven Dollars ($667.00) for each calendar month or portion
thereof (excluding the month in which he is first elected to such position)
that he holds such position.
3.7 A Director's Deferred Fee Account shall be credited with interest
annually. During the calendar years 1968 and prior, the rate of interest
credited to deferred fees shall be four (4) percent per annum. During the
calendar years 1969 through 1992, the rate of interest credited to deferred
fees shall be the average of the prime rates being charged by two largest
commercial banks in the City of Chicago as of the end of the month coincident
with or last preceding the date upon which said interest is so credited.
During the calendar years 1993 and subsequent, the rate of interest credited
to deferred fees shall be equal to: (a) the average of the prime rates being
charged by the two largest commercial banks in the City of Chicago as of the
end of the month coincident with or last preceding the date upon which said
interest is so credited; plus (b) two hundred twenty-five (225) basis points.
For purposes of the provisions of the Plan, the term "deferred fees" shall
include "deferred monthly fees," and "deferred meeting fees," and shall also
include any such interest credited thereon.
SECTION 4
PAYMENT OF DIRECTORS' FEES
4.1 A Director's deferred fees earned pursuant to the Plan shall
commence to be paid on the first day of the calendar month next following the
earlier of his death or his attainment of age sixty-five (65) if he is not
then serving as a Director, or the termination of his service as a Director if
he serves as a Director after the attainment of age sixty-five (65); provided
that any Director may, by written notice filed with the Secretary of the
Company, elect to receive current payment of all or any portion of the monthly
and meeting fees earned by him in calendar years subsequent to the calendar
year in which he files such notice (or all or any portion of such fees earned
by him in the calendar year he first becomes a Director, if such notice is
filed within 30 days of becoming a Director), in which case such fees or the
portion thereof so designated earned in such calendar years shall not be
deferred but shall be paid quarterly as earned and no interest shall be
credited thereon. Such election may be revoked or modified by any Director by
written notice to the Secretary of the Company as to fees to be earned by him
in calendar years subsequent to the calendar year in which he files such
notice.
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4.2 After a Director's deferred fees shall have commenced to be
payable pursuant to Paragraph 4.1 they shall be payable in annual installments
in the order in which they shall have been deferred (i.e. the deferred fees
for the earliest year of service as a Director will be paid on the date
provided for in Section 4.1, the deferred fees for the next earliest year of
service as a Director will be paid on the anniversary of the payment of the
first installment, etc.).
4.3 A Director's deferred fees shall continue to be paid until all
deferred fees which he is entitled to receive under the Plan shall have been
paid to him (or, in case of his death, to his beneficiary).
4.4 Notwithstanding any other provisions of the Plan, if a Director's
service as a Director should terminate for any reason within five (5) years
after the date of a Change in Control, the aggregate unpaid balance of such
Director's deferred fees plus all unpaid interest credited thereon, shall be
paid to such Director in a lump sum within thirty (30) days following the date
of such termination.
4.5 A "Change in Control" shall be deemed to have occurred on the
earliest of the following dates:
(i) The date any entity or person (including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the
"Exchange Act")) shall have become the beneficial owner of, or shall
have obtained voting control over thirty percent (30%) or more of
the outstanding common shares of the Company;
(ii) The date the shareholders of the Company approve a definitive
agreement (A) to merge or consolidate the Company with or into
another corporation, in which the Company is not the continuing or
surviving corporation or pursuant to which any common shares of the
company would be converted into cash, securities or other property
of another corporation, other than a merger of the Company in which
holders of common shares immediately prior to the merger have the
same proportionate ownership of common stock of the surviving
corporation immediately after the merger as immediately before, or
(B) to sell or otherwise dispose of substantially all the assets of
the Company; or
(iii) The date there shall have been a change in a majority of the Board
of Directors of the Company within a twelve (12) month period unless
the nomination for election by the Company's shareholders of each
new director was approved by the vote of two-thirds of the directors
then still in office who were in office at the beginning of the
twelve (12) month period.
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4.6 The provisions of Paragraphs 4.4 and 4.5 and this Paragraph 4.6
may not be amended or deleted, nor superseded by any other provision of the
Plan, during the period beginning on the date of a Change in Control and
ending on the date five (5) years following such Change in Control.
SECTION 5
DIRECTORS' RETIREMENT BENEFIT
5.1 The Compensation Committee may, in its discretion, grant any
Director who retires from the Board of Directors a monthly retirement benefit
on the terms and conditions hereinafter set forth and such retirement benefit
shall be provided to the surviving spouse of any Director who dies while
serving as a Director.
5.2 The term "continuous service" shall mean the Director's longest
period of uninterrupted service on the Board of Directors, determined under
the following rules:
(a) A Director shall be entitled to one month of
continuous service for each calendar month or portion
thereof (excluding the month in which he or she is
first elected a Director) that the Director holds such
office with the Company, excluding any month during
which the Director was a full-time employee of the
Company or any of its subsidiaries.
(b) A Director shall not be entitled to more than one
hundred twenty (120) months of continuous service.
5.3 Each Director or surviving spouse who is granted a retirement
benefit hereunder shall receive a monthly benefit equal to the deferred
monthly fee in effect for Directors under Paragraph 3.l as of the date of the
earlier of the Director's death or termination of service as a Director. The
monthly benefit shall commence to be paid on the first day of the calendar
month next following the earlier of the Director's death or termination of
service as a Director. Unless the retirement benefit is terminated, the
monthly benefit shall continue to be paid on the first day of each calendar
month thereafter, until the benefit has been paid for a number of months equal
to the Director's continuous service, or until the death of the Director or
surviving spouse, if earlier. If a Director should retire and be granted a
retirement benefit hereunder and subsequently die with such benefit still in
effect, prior to receipt of all payments due hereunder, the monthly benefit
shall continue to the surviving spouse of such Director until all payments due
hereunder have been made or until the death of the surviving spouse, if
earlier.
5.4 Each Director who is granted a retirement benefit hereunder shall
make him or herself available for such consultation with the Board of
Directors or any committee or member thereof, as
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may be reasonably requested from time to time by the Chairman of the Board of
Directors, following such Director's termination of service as a Director.
The Company shall reimburse each such Director for all reasonable travel,
lodging and subsistence expenses incurred by the Director at the request of
the Company in rendering such consultation. The Company may terminate the
retirement benefit if the Director should fail to render such consultation,
unless prevented by disability or other reason beyond the Director's control.
5.5 It is recognized that during a Director's period of service as a
Director and as a consultant hereunder, a Director will acquire knowledge of
the affairs of the Company and its subsidiaries, the disclosure of which would
be contrary to the best interests of the Company. Accordingly, the Company
may terminate the retirement benefit if, without the express consent of the
Company, the Director accepts election to the Board of Directors of, acquires
a partnership or proprietary interest in, or renders services as an employee
or consultant to, any business entity which is engaged in substantial
competition with the Company or any of its subsidiaries.
5.6 An individual will be considered a Director's "surviving spouse"
for purposes of this Section 5 only if the Director and such individual were
married in a religious or civil ceremony recognized under the laws of the
state where the marriage was contracted and the marriage remained legally
effective at the date of the Director's death.
SECTION 6
CONVERSION TO COMMON STOCK UNITS
6.1 Any Director who is then serving as a director may, by written
notice filed with the Secretary of the Company, elect to have all or any
portion of deferred fees previously earned but not yet paid, transferred from
the Director's Deferred Fee Account to a Stock Account maintained on his or
her behalf pursuant to paragraph 9.3. Any election as to a portion of such
fees shall be expressed as a percentage and the same percentage shall be
applied to all such fees regardless of the calendar year in which earned or to
all deferred fees earned in designated calendar years, as specified by the
Director. A Director may make no more than one election under this paragraph
6.l in any calendar year. All such elections may apply only to deferred fees
for which an election has not previously been made and shall be irrevocable.
6.2 Any Director may, by written notice filed with the Secretary of
the Company, elect to have all or any portion of deferred fees earned
subsequent to the date such notice is filed credited to a Stock Account
established under this Section 6. Fees covered by such election shall be
credited to such account at the end of each calendar quarter in, or for which,
such fees are earned. Such election may be revoked or modified by such
Director, by
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written notice filed with the Secretary of the Company, as to deferred fees to
be earned in calendar years subsequent to the calendar year such notice is
filed, but shall be irrevocable as to deferred fees earned prior to such year.
6.3 Deferred fees credited to a Stock Account under paragraph 6.1
shall be converted to Common Stock Units by dividing the deferred fees so
credited by the closing price of common shares of the Company on the date
notice of election under paragraph 6.1 is received by the Company (or the next
business day, if there are no sales on such date) as reported on the New York
Stock Exchange Composite Reporting System. Deferred fees credited to a Stock
Account under paragraph 6.2 shall be converted to Common Stock Units by
dividing the deferred fees so credited by the closing price of common shares
of the Company as of the last business day of the calendar quarter for which
the credit is made, as reported on the New York Stock Exchange Composite
Reporting System.
6.4 Each Common Stock Unit shall be credited with the same cash and
stock dividends, stock splits and other distributions and adjustments as are
received by one common share of the Company. All cash dividends and other cash
distributions credited to Common Stock Units shall be converted to additional
Common Stock Units by dividing each such dividend or distribution by the
closing price of common shares of the Company on the payment date for such
dividend or distribution, as reported by the New York Stock Exchange Composite
Reporting System.
6.5 The value of the Common Stock Units credited each Director shall
be paid the Director in cash on the dates specified in paragraph 4.2 (or, if
applicable, paragraph 4.4). The amount of each payment shall be determined by
multiplying the Common Stock Units payable on each date specified in paragraph
4.2 (or, if applicable, paragraph 4.4) by the closing price of common shares
of the Company on the day prior to that date (or the next preceding business
day if there are no sales on such date), as reported by the New York Stock
Exchange Composite Reporting System.
SECTION 7
MISCELLANEOUS
7.1 Each Director or former Director entitled to payment of deferred
fees hereunder, from time to time may name any person or persons (who may be
named contingently or successively) to whom any deferred Director's fees
earned by him and payable to him are to be paid in case of his death before he
receives any or all of such deferred Director's fees. Each designation will
revoke all prior designations by the same Director or former Director, shall
be in form prescribed by the Company, and will be effective only when filed by
the Director or former Director in writing with the Secretary of the Company
during his lifetime. If a deceased Director or former Director shall have
failed to name a beneficiary in the manner provided above, or if the
beneficiary named by a
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deceased Director or former Director dies before him or before payment of all
the Director's or former Director's deferred Directors' fees, the Company, in
its discretion, may direct payment in a single sum of any remaining deferred
Directors' fees to either:
(a) any one or more or all of the next of kin (including the surviving
spouse) of the Director or former Director, and in such proportions as
the Company determines; or
(b) the legal representative or representatives of the estate of the last
to die of the Director or former Director and his last surviving
beneficiary.
The person or persons to whom any deceased Director's or former Director's
deferred Directors' fees are payable under this paragraph will be referred to
as his "beneficiary."
7.2 Establishment of the Plan and coverage thereunder of any person
shall not be construed to confer any right on the part of such person to be
nominated for reelection to the Board of Directors of the Company, or to be
reelected to the Board of Directors.
7.3 Payment of deferred Directors' fees will be made only to the
person entitled thereto in accordance with the terms of the Plan, and deferred
Directors' fees are not in any way subject to the debts or other obligations
of persons entitled thereto, and may not be voluntarily or involuntarily sold,
transferred to assigned. When a person entitled to a payment under the Plan is
under legal disability or, in the Company's opinion, is in any way
incapacitated so as to be unable to manage his financial affairs, the Company
may direct that payment be made to such person's legal representative, or to a
relative or friend of such person for his benefit. Any payment made in
accordance with the preceding sentence shall be in complete discharge of the
Company's obligation to make such payment under the Plan.
7.4 Any action required or permitted to be taken by the Company under
the terms of the Plan shall be by affirmative vote of a majority of the
members of the Board of Directors then in office.
SECTION 8
AMENDMENT AND DISCONTINUANCE
While the Company expects to continue the Plan, it must necessarily
reserve, and does hereby reserve, the right to amend or discontinue the Plan
at any time; provided, however, that any amendment or discontinuance of the
Plan shall be prospective in operation only, and shall not affect the payment
of any deferred Directors' fees theretofore earned by any Director, or the
conditions under which any such fees are to be paid or forfeited under the
Plan, unless the Director affected shall expressly consent thereto.
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SECTION 9
ALTERNATE PAYMENT OF DEFERRED FEES
9.1 By written notice filed with the Secretary of the Company prior
to calendar years beginning after December 31, 1988 (or, for the calendar year
he first becomes a Director within 30 days of becoming a Director), a Director
may elect to receive all or any portion of his deferred fees earned in such
calendar years in a lump sum in accordance with the provisions of this Section
9. An election under this subsection 9.1 may be revoked or modified by the
Director by written notice to the Secretary of the Company as to deferred fees
earned under Section 3 in calendar years beginning after the calendar year in
which he files such notice. Any amounts that were deferred for calendar years
beginning before January 1, 1989 shall automatically be paid as provided in
this Section 9.
9.2 If payment of a Director's deferred fees is made pursuant to
paragraph 9.1, a portion of such fees shall be paid in cash for the Director
directly to a "Grantor Trust" established by the Director, provided such trust
is in a form which the Company determines to be substantially similar to the
trust attached to this plan as Exhibit A; and the balance of the deferred fees
shall be paid in cash directly to the Director, provided that the payment made
directly to the Director shall approximate the aggregate federal, state and
local individual income taxes attributable to the deferred fees paid pursuant
to this paragraph 9.2.
9.3 The Company will establish and maintain four separate accounts in
the name of each Director, "a Deferred Fee Account", a "Deferred Fee Trust
Account", a "Stock Account" and a "Stock Trust Account". The Deferred Fee
Account shall reflect the deferred fees and interest to be credited to a
Director pursuant to Section 3. The Deferred Fee Trust Account shall reflect
any deferred fees paid in cash to a Director (including amounts paid to a
Director's Grantor Trust and allocated to the deferred account maintained
thereunder) pursuant to paragraph 9.2 and any adjustments made pursuant to
paragraph 9.4. The Stock Account shall reflect the deferred fees converted to
Common Stock Units pursuant to Section 6 and any adjustments made pursuant to
that Section. The Stock Trust Account shall reflect deferred fees that have
been converted to Common Stock Units under Section 6 and paid in cash to a
Director (including amounts paid to a Director's Grantor Trust and allocated
to the stock account maintained thereunder) pursuant to paragraph 9.2 and any
adjustments made pursuant to paragraph 9.5. The Accounts established pursuant
to this paragraph 9.3 are for the convenience of the administration of the
plan and no trust relationship with respect to such Accounts is intended or
should be implied.
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9.4 As of the end of each calendar year, the Company shall adjust
each Director's Deferred Fee Trust Account as follows:
(a) FIRST, charge an amount equal to the product of: (i) any payments made
to the Director during that year from the deferred account maintained
under his or her Grantor Trust (other than distributions of trust
earnings in excess of the Net Interest Accrual authorized by the
administrator of the trust to provide for the Tax Gross Up under
paragraph 9.9 below); multiplied by (ii) a fraction, the numerator of
which is the balance in the Director's Deferred Fee Trust Account as
of the end of the prior calendar year and the denominator of which is
the balance in the deferred account maintained under the Director's
Grantor Trust (as determined by the administrator of the trust) as of
that same date;
(b) NEXT, credit an amount equal to the deferred fees that have not been
converted to Common Stock Units that are paid that year to the
Director (including the amount paid to the Director's Grantor Trust
and allocated to the deferred account maintained thereunder) pursuant
to paragraph 9.2; and
(c) FINALLY, credit an amount equal to the Interest Accrual earned for
that year pursuant to paragraph 9.6.
9.5 As of the end of each calendar year, the Company shall adjust
each Director's Stock Trust Account as follows:
(a) FIRST, charge an amount equal to the product of: (i) any payments made
to the Director during that year from the stock account maintained
under his or her Grantor Trust (other than distributions of trust
earnings authorized by the administrator of the trust to provide for
the Tax Gross Up under paragraph 9.9 below); multiplied by (ii) a
fraction, the numerator of which is the balance in the Director's
Stock Trust Account as of the end of the prior calendar year and the
denominator of which is the balance in the stock account maintained
under the Director's Grantor Trust (as determined by the administrator
of the trust) as of that same date;
(b) NEXT, credit an amount equal to the deferred fees that have been
converted to Common Stock Units that are paid that year to the
Director (including the amount paid to the Director's Grantor Trust
and allocated to the stock account maintained thereunder) pursuant to
paragraph 9.2; and
(c) FINALLY, credit an amount equal to the Book Value Adjustments to be
made for that year pursuant to paragraph 9.6.
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9.6 As of the end of each calendar year, a Director's Deferred Fee
Trust Account shall be credited with interest at the rate described in
paragraph 3.7. Any amount so credited shall be referred to as a Director's
"Interest Accrual". As of that same date, a Director's Stock Trust Account
shall be adjusted as provided in paragraph 6.4, and shall also be adjusted to
reflect the increase or decrease in the fair market value of the Company's
common stock determined in accordance with paragraph 6.5. Such adjustments
shall be referred to as "Book Value Adjustments."
9.7 In addition to any fees earned by a Director under Section 3 of
this plan or paid under paragraphs 4.1 or 9.1 the Company shall also make a
payment to a Director's Grantor Trust (a "Guaranteed Rate Payment"), to be
credited to the deferred account maintained thereunder, for any year in which
the net income credited to the deferred account maintained under such trust
does not equal or exceed the Director's Net Interest Accrual for that year. A
Director's "Net Interest Accrual" for a year is an amount equal to: (a) the
Interest Accrual credited to the Director's Deferred Fee Trust Account for
that year; less (b) the product of (i) the amount of such Interest Accrual,
multiplied by (ii) the aggregate of the federal, state and local individual
income tax rates (determined in accordance with paragraph 9.10). The
Guaranteed Rate Payment shall equal the difference between the Director's Net
Interest Accrual and the net income credited to the deferred account
maintained under the Director's Grantor Trust for the year, and shall be paid
within 90 days of the end of that year.
9.8 The Company shall also make a payment to a Director's Grantor
Trust (a "Guaranteed Principal Payment"), to be credited to the stock account
maintained thereunder, to the extent the that the balance in the stock account
as of the end of any calendar year is less than 75 percent of the balance of
the Director's Stock Trust Account (net of federal, state and local income
taxes) as of that same date. For the calendar year in which the last
installment distribution is made from the Director's Grantor Trust, the
payment made under this paragraph 9.8 shall equal the amount, if any, needed
to increase the fair market value of the stock account maintained under the
Director's Grantor Trust; such that if a distribution of the stock account
were then made to the Director, the Director would receive the same amount he
or she would have received (net of federal, state and local income taxes) if
his or her Stock Trust Account were to be distributed on that same date with
the deferred fees that had been allocated to that Account taxed at the
federal, state and local income tax rates in effect on the date the fees were
credited to the Account and the balance of the Account taxed at the federal,
state and local income tax rates in effect on the date of the distribution.
Payments required under this paragraph 9.8 shall be made within 90 days of the
end of the calendar year, except the last payment which shall be made not
later than the due date of the last installment distribution from the
Director's Grantor Trust.
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9.9 In addition to the fees provided under Section 3, each Director
(or, if the Director is deceased, the beneficiary designated under the
Director's Grantor Trust) shall be entitled to a Tax Gross Up payment for each
year there is a balance in his or her Deferred Fee Trust Account or Stock
Trust Account. The "Tax Gross Up" shall approximate: (a) the amount necessary
to compensate the Director (or beneficiary) for the net increase in his or her
federal, state and local income taxes as a result of the inclusion in the
Director's (or beneficiary's) taxable income of the income of his or her
Grantor Trust and any Guaranteed Rate and Guaranteed Principal Payments for
that year; less (b) any distribution to the Director (or beneficiary) of his
or her Grantor Trust's net earnings for that year; plus (c) an amount
necessary to compensate the Director (or beneficiary) for the net increase in
the taxes described in (a) above as a result of the inclusion in his or her
taxable income of any payment made pursuant to this paragraph 9.9.
9.10 For purposes of this Section, a Director's federal income tax
rate shall be deemed to be the highest marginal rate of federal individual
income tax in effect in the calendar year in which a calculation under this
Section is to be made and state and local tax rates shall be deemed to be the
highest marginal rates of individual income tax in effect in the state and
locality of the Director's residence on the date such a calculation is made,
net of any federal tax benefits. Notwithstanding the preceding sentence, if a
Director is not a citizen or resident of the United States, his or her income
tax rates shall be deemed to be the highest marginal income tax rates actually
imposed on the Director's benefits under this Plan or earnings under his or
her Grantor Trust.
Exhibit A
IRREVOCABLE GRANTOR TRUST AGREEMENT
THIS AGREEMENT, made this ______ day of _______________________, 198__, by
and between __________________________ of ________________, _________________
(the "grantor"), and The Northern Trust Company, located at Chicago, Illinois,
as trustee (the "trustee"),
WITNESSETH THAT:
WHEREAS, the grantor desires to establish and maintain a trust to hold
certain benefits received by the grantor under the Abbott Laboratories
Non-Employee Directors' Fee Plan, as it may be amended from time to time;
NOW, THEREFORE, IT IS AGREED as follows:
ARTICLE I
INTRODUCTION
I-1. NAME. This agreement and the trust hereby evidenced (the
"trust") may be referred to as the "_______________ 1988 Grantor Trust".
I-2. THE TRUST FUND. The "trust fund" as at any date means all
property then held by the trustee under this agreement.
I-3. STATUS OF THE TRUST. The trust shall be irrevocable. The trust
is intended to constitute a grantor trust under Sections 671-678 of the
Internal Revenue Code, as amended, and shall be construed accordingly.
I-4. THE ADMINISTRATOR. Abbott Laboratories ("Abbott") shall act as
the "administrator" of the trust, and as such shall have certain powers,
rights and duties under this agreement as described below. Abbott will
certify to the trustee from time to time the person or persons authorized to
act on behalf of Abbott as the administrator. The trustee may rely on the
latest certificate received without further inquiry or verification.
I-5. ACCEPTANCE. The trustee accepts the duties and obligations of
the "trustee" hereunder, agrees to accept funds delivered to it by the grantor
or the administrator, and agrees to hold such funds (and any proceeds from the
investment of such funds) in trust in accordance with this agreement.
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ARTICLE II
DISTRIBUTION OF THE TRUST FUND
II-1. SEPARATE ACCOUNTS. The administrator shall maintain two
separate accounts under the trust, a "deferred account" and a "stock account."
Funds delivered to the trustee shall be allocated between the accounts by the
trustee as directed by the administrator. As of the end of each calendar
year, the administrator shall charge each account with all distributions made
from such account during that year; and credit each account with its share of
income and realized gains and charge each account with its share of expenses
and realized losses for the year. The trustee shall be required to make
separate investments of the trust fund for the accounts, and may not
administer and invest all funds delivered to it under the trust as one trust
fund.
II-2. DISTRIBUTIONS PRIOR TO THE GRANTOR'S DEATH. Principal and
accumulated income shall not be distributed from the trust prior to the
grantor's termination of service as a Director of Abbott (the grantor's
"settlement date"); provided that, each year the administrator may direct the
trustee to distribute to the grantor a portion of the income of the trust fund
for that year, with the balance of such income to be accumulated in the trust.
The administrator shall inform the trustee of the grantor's settlement date.
Thereafter, the trustee shall distribute the trust fund to the grantor, if
then living, in a series of annual installments, commencing on the first day
of the month next following the later of the grantor's settlement date or the
date the grantor attains age 65 years. The administrator shall inform the
trustee of the number of installment distributions and the amount of each
installment distribution under this paragraph II-2, and the trustee shall be
fully protected in relying on such information received from the
administrator.
II-3. DISTRIBUTIONS AFTER THE GRANTOR'S DEATH. The grantor, from
time to time may name any person or persons (who may be named contingently or
successively and who may be natural persons or fiduciaries) to whom the
principal of the trust fund and all accrued or undistributed income thereof
shall be distributed in a lump sum or, if the beneficiary is the grantor's
spouse, in installments, as directed by the grantor, upon the grantor's death.
If the grantor directs an installment method of distribution, any amounts
remaining at the death of the spouse beneficiary shall be distributed in a
lump sum. Each designation shall revoke all prior designations, shall be in
writing and shall be effective only when filed by the grantor with the
administrator during the grantor's lifetime. If the grantor fails to direct a
method of distribution, the distribution shall be made in a lump sum. If the
grantor fails to designate a beneficiary as provided above, then on the
grantor's death, the trustee shall distribute the balance of the trust fund in
a lump sum to the executor or administrator of the grantor's estate.
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II-4. FACILITY OF PAYMENT. When a person entitled to a distribution
hereunder is under legal disability, or, in the trustee's opinion, is in any
way incapacitated so as to be unable to manage his or her financial affairs,
the trustee may make such distribution to such person's legal representative,
or to a relative or friend of such person for such person's benefit. Any
distribution made in accordance with the preceding sentence shall be a full
and complete discharge of any liability for such distribution hereunder.
II-5. PERPETUITIES. Notwithstanding any other provisions of this
agreement, on the day next preceding the end of 21 years after the death of
the last to die of the grantor and the grantor's descendants living on the
date of this instrument, the trustee shall immediately distribute any
remaining balance in the trust to the beneficiaries then entitled to
distributions hereunder.
ARTICLE III
MANAGEMENT OF THE TRUST FUND
III-1. GENERAL POWERS. The trustee shall, with respect to the trust
fund, have the following powers, rights and duties in addition to those
provided elsewhere in this agreement or by law:
(a) Subject to the limitations of subparagraph (b) next below, to sell,
contract to sell, purchase, grant or exercise options to purchase, and
otherwise deal with all assets of the trust fund, in such way, for
such considerations, and on such terms and conditions as the trustee
decides.
(b) To retain in cash such amounts as the trustee considers advisable; and
to invest and reinvest the balance of the trust fund, without
distinction between principal and income, in common stock of Abbott
Laboratories, or in obligations of the United States Government and
its agencies or which are backed by the full faith and credit of the
United States Government or in any mutual fund, common trust fund or
collective investment fund which invests solely in such obligations;
and any such investment made or retained by the trustee in good faith
shall be proper despite any resulting risk or lack of diversification
or marketability.
(c) To deposit cash in any depositary (including the banking department of
the bank acting as trustee) without liability for interest, and to
invest cash in savings accounts or time certificates of deposit
bearing a reasonable rate of interest in any such depositary.
(d) To invest, subject to the limitations of subparagraph (b) above, in
any common or commingled trust fund or funds
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maintained or administered by the trustee solely for the investment of
trust funds.
(e) To borrow from anyone, with the administrator's approval, such sum or
sums from time to time as the trustee considers desirable to carry out
this trust, and to mortgage or pledge all or part of the trust fund as
security.
(f) To retain any funds or property subject to any dispute without
liability for interest and to decline to make payment or delivery
thereof until final adjudication by a court of competent jurisdiction
or until an appropriate release is obtained.
(g) To begin, maintain or defend any litigation necessary in connection
with the administration of this trust, except that the trustee shall
not be obliged or required to do so unless indemnified to the
trustee's satisfaction.
(h) To compromise, contest, settle or abandon claims or demands.
(i) To give proxies to vote stocks and other voting securities, to join in
or oppose (alone or jointly with others) voting trusts, mergers,
consolidations, foreclosures, reorganizations, liquidations, or other
changes in the financial structure of any corporation, and to exercise
or sell stock subscription or conversion rights.
(j) To hold securities or other property in the name of a nominee, in a
depositary, or in any other way, with or without disclosing the trust
relationship.
(k) To divide or distribute the trust fund in undivided interests or
wholly or partly in kind.
(l) To pay any tax imposed on or with respect to the trust; to defer
making payment of any such tax if it is indemnified to its
satisfaction in the premises; and to require before making any payment
such re lease or other document from any lawful taxing authority and
such indemnity from the intended payee as the trustee considers
necessary for its Protection.
(m) To deal without restriction with the legal representative of the
grantor's estate or the trustee or other legal representative of any
trust created by the grantor or a trust or estate in which a
beneficiary has an interest, even though the trustee, individually,
shall be acting in such other capacity, without liability for any loss
that may result.
(n) To appoint or remove by written instrument any bank or corporation
qualified to act as successor trustee, wherever located, as special
trustee as to part or all of the trust fund, including property as to
which the trustee does not act, and such special trustee, except as
specifically limited or
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provided by this or the appointing instrument, shall have all of the
rights, titles, powers, duties, discretions and immunities of the
trustee, without liability for any action taken or omitted to be taken
under this or the appointing instrument.
(o) To appoint or remove by written instrument any bank, wherever located,
as custodian of part or all of the trust fund, and each such custodian
shall have such rights, powers, duties and discretions as are
delegated to it by the trustee.
(p) To employ agents, attorneys, accountants or other persons, and to
delegate to them such powers as the trustee considers desirable, and
the trustee shall be protected in acting or refraining from acting on
the advice of Persons so employed without court action.
(q) To perform any and all other acts which in the trustee's judgment are
appropriate for the proper management, investment and distribution of
the trust fund.
III-2. PRINCIPAL AND INCOME. Any income earned on the trust fund
which is not distributed as provided in Article II shall be accumulated and
from time to time added to the principal of the trust. The grantor's interest
in the trust shall include all assets or other property held by the trustee
hereunder, including principal and accumulated income.
III-3. STATEMENTS. The trustee shall prepare and deliver monthly to
the administrator and annually to the grantor, if then living, otherwise to
each beneficiary then entitled to distributions under this agreement, a
statement (or series of statements) setting forth (or which taken together set
forth) all investments, receipts, disbursements and other transactions
effected by the trustee during the reporting period; and showing the trust
fund and the value thereof at the end of such period.
III-4. COMPENSATION AND EXPENSES. All reasonable costs, charges and
expenses incurred in the administration of this trust, including compensation
to the trustee, any compensation to agents, attorneys, accountants and other
persons employed by the trustee, and expenses incurred in connection with the
sale, investment and reinvestment of the trust fund shall be paid from the
trust fund.
ARTICLE IV
GENERAL PROVISIONS
IV-1. INTERESTS NOT TRANSFERABLE. The interests of the grantor or
other persons entitled to distributions hereunder are not subject to their
debts or other obligations and may not be voluntarily or involuntarily sold,
transferred, alienated, assigned or encumbered.
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IV-2. DISAGREEMENT AS TO ACTS. If there is a disagreement between
the trustee and anyone as to any act or transaction reported in any
accounting, the trustee shall have the right to a settlement of its account by
any proper court.
IV-3. TRUSTEE'S OBLIGATIONS. No power, duty or responsibility is
imposed on the trustee except as set forth in this agreement. The trustee is
not obliged to determine whether funds delivered to or distributions from the
trust are proper under the trust, or whether any tax is due or payable as a
result of any such delivery or distribution. The trustee shall be protected
in making any distribution from the trust as directed pursuant to Article II
without inquiring as to whether the distributee is entitled thereto; and the
trustee shall not be liable for any distribution made in good faith without
writ ten notice or knowledge that the distribution is not proper under the
terms of this agreement.
IV-4. GOOD FAITH ACTIONS. The trustee's exercise or non-exercise of
its powers and discretions in good faith shall be conclusive on all persons.
No one shall be obliged to see to the application of any money paid or
property delivered to the trustee. The certificate of the trustee that it is
acting according to this agreement will fully protect all persons dealing with
the trustee.
IV-5. WAIVER OF NOTICE. Any notice required under this agreement may
be waived by the Person entitled to such notice.
IV-6. CONTROLLING LAW. The laws of the State of Illinois shall
govern the interpretation and validity of the provisions of this agreement and
all questions relating to the management, administration, investment and
distribution of the trust hereby created.
IV-7. SUCCESSORS. This agreement shall be binding on all persons
entitled to distributions hereunder and their respective heirs and legal
representatives, and on the trustee and its successors.
ARTICLE V
CHANGES IN TRUSTEE
V-1. RESIGNATION OR REMOVAL OF TRUSTEE. The trustee may resign at
any time by giving thirty days' advance written notice to the administrator
and the grantor. The administrator may remove a trustee by written notice to
the trustee and the grantor.
V-2. APPOINTMENT OF SUCCESSOR TRUSTEE. The administrator shall fill
any vacancy in the office of trustee as soon as practicable by written notice
to the successor trustee; and shall give prompt written notice thereof to the
grantor, if then living, otherwise to each beneficiary then entitled to
payments or
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distributions under this agreement. A successor trustee shall be a bank (as
defined in Section 581 of the Internal Revenue Code, as amended).
V-3. DUTIES OF RESIGNING OR REMOVED TRUSTEE AND OF SUCCESSOR
TRUSTEE. A trustee that resigns or is removed shall furnish promptly to the
administrator and the successor trustee an account of its administration of
the trust from the date of its last account. Each successor trustee shall
succeed to the title to the trust fund vested in its predecessor without the
signing or filing of any instrument, but each predecessor trustee shall
execute all documents and do all acts necessary to vest such title of record
in the successor trustee. Each successor trustee shall have all the powers
conferred by this agreement as if originally named trustee. No successor
trustee shall be personally liable for any act or failure to act of a
predecessor trustee. With the approval of the administrator, a successor
trustee may accept the account furnished and the property delivered by a
predecessor trustee without incurring any liability for so doing, and such
acceptance will be complete discharge to the predecessor trustee.
ARTICLE VI
AMENDMENT AND TERMINATION
VI-1. AMENDMENT. With the consent of the administrator, this trust
may be amended from time to time by the grantor, if then living, otherwise by
a majority of the beneficiaries then entitled to payments or distributions
hereunder, except as follows:
(a) The duties and liabilities of the trustee cannot be changed
substantially without its consent.
(b) This trust may not be amended so as to make the trust revocable.
VI-2. TERMINATION. This trust shall not terminate, and all rights,
titles, powers, duties, discretions and immunities imposed on or reserved to
the trustee, the administrator, the grantor and the beneficiaries shall
continue in effect, until all assets of the trust have been distributed by the
trustee as provided in Article II.
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IN WITNESS WHEREOF, the grantor and the trustee have executed this
agreement as of the day and year first above written.
Grantor_______________________________
The Northern Trust Company, as
Trustee
By____________________________________
Its___________________________________